January 18, 2012

The Rise and Fall of Bill Daley: An Inside Account

When President Obama announced that Bill Daley would no longer serve as White House chief of staff, he pronounced himself chagrined by the move but explained that Daley had an understandable desire to return to Chicago. “In the end,” the president told reporters in the State Dining Room, “the pull of the hometown we both love—a city that’s been synonymous with the Daley family for generations—was too great.”

As a face-saving gesture this may have been understandable, but as an explanation for Daley’s departure it strains credulity. When he began his stint as chief of staff, just over a year ago, Daley told friends that it was his “dream job,” according to a White House aide. As recently as October, Daley had told a Chicago television station that he “made a commitment to the president” to stay through the election. The story here is not about the pull of a hometown, but rather about a stark failure—Daley’s failure at the job, and the president’s choice of the wrong man for the task.

Daley had been a walking corpse since November, when the president downgraded his authority by bringing in another advisor, Pete Rouse, to serve as a kind of chief operating officer, with the power to execute decisions without approval from Daley or any other staffer. Daley retained his West Wing corner office, but he was still chief of staff in name only. (His new, curiously amorphous role, as described by senior administration officials at the time, would be to act as an outside ambassador to constituencies in the business community and elsewhere.)

So what exactly went wrong for Daley? How did the consummate political professional—Bill Clinton’s Commerce Secretary, Al Gore’s 2000 presidential campaign manager, and informal advisor to his older brother Richard M. Daley, longtime mayor of Chicago—become the Obama administration’s most expendable man?

IN RECENT MONTHS, I conducted a number of interviews with senior White House officials, close Daley friends, and others. (Most of these interviews were conducted before Daley’s resignation was announced.) As I gleaned from these conversations, Daley was recruited for the chief of staff job, in late 2010, by a pair of fellow Chicagoans: David Axelrod and Rahm Emanuel, Obama’s first chief of staff, who had departed the post to run (successfully, it turned out) to succeed Richard Daley as Chicago’s mayor. Axelrod, who got to know both brothers decades earlier as a Chicago Tribune reporter, told me that he viewed Bill as a gifted political hand with a deft touch for disarming adversaries. (Axelrod recounted how, after the irascible Chicago columnist Mike Royko wrote that the Daley brothers were too stupid to tie their own shoes, Bill phoned the columnist to say—as Royko told Axelrod at the time—“Mike, I just want to put your mind at ease. We’re all wearing loafers.”) In an interview last year, Axelrod told me that “Bill had a much more contemporary understanding of politics” than Richard, with an early interest, for example, in hiring outside pollsters for the latter’s campaigns.

It wasn’t the first time Daley had considered the prospect of joining the Obama administration. Soon after Obama’s election to the White House, according to several friends of his, Daley had turned down an opportunity to join the administration as ambassador to China.

For the chief of staff job, Daley had one serious handicap: He didn’t yet know Obama himself. Most times, the president appoints as chief of staff a person he has first gotten to know outside the pressure cauldron of the White House. Obama and Emanuel already had that sort of relationship by the time they entered the White House. Obama and Daley, however, barely knew each other.

But Obama offered Daley the job anyway. Pat Griffin, a close Daley buddy and veteran of the Clinton White House, suggests that Obama chose Daley in part because Daley promised to fit well with Obama’s preference for a no-drama milieu. “His ego is not so far outside of him—in a town where the egos are so big you can’t get out the door,” Griffin told me. “He’s very calm, he’s very rational—and he’s not prone to leap before he looks,” said Mickey Kantor, a longtime Daley friend who worked with him in the Clinton White House on getting NAFTA approved by Congress. By contrast, Emanuel, for all his talents, had a mercurial temperament and a seeming addiction to crisis management.

Just as important, Daley had bipartisan credibility. Daley had always felt at home with big business, a core Republican constituency: Indeed, he had spent the previous seven years in Chicago as Midwest chairman of JP Morgan Chase. And whereas Emanuel had a reputation as a partisan warrior, Daley was known to play nice with Republicans. That mattered because Republicans had just captured the House in the November midterm elections.

Among many liberals, however, Daley’s appointment was not popular. An unrepentant moderate, Daley represented the anti-Paul Krugman wing of the Democratic Party. In mid-2010, he had joined the board of Third Way, a Washington think tank dedicated to steering the Democratic Party in a moderate, pro-business direction. He told the group’s president, Jonathan Cowan, a former Clinton administration staffer, that entitlements, including Medicare and Social Security, needed to be overhauled to rein in spiraling costs. Democrats needed to be saying, as Cowan characterized Daley’s perspective, that “we are the ones who built and championed these programs, and now we are the ones to help lead the reform of them, in a responsible way.” (Daley declined to speak on the record for this piece.)

In phase one of Daley’s tenure at the White House, this strategy was ascendant. It was Daley, with the president’s backing, who reached out to the new House Speaker, John Boehner, in a series of moves all designed to culminate in a grand bargain between Democrats and Republicans on taxes and spending, including entitlement reforms. Daley sat down with Boehner for a get-acquainted, steaks-and-wine dinner at Bobby Van’s Steakhouse in downtown D.C. in February, and then arranged for the “golf summit” in June at which Obama and Boehner, joined by Vice President Joe Biden and Ohio’s GOP governor, John Kasich, came together for an 18-hole outing at Andrews Air Force Base.

With the U.S. government’s debt ceiling in danger of being breached, the Obama and Boehner camps got down to hard talks aimed at reducing the deficit by $4 trillion over ten years. Multiple White House aides told me that Daley was the number-one advocate for a bold package including concessions on Democratic sacred cows. On the table were big-ticket items like raising the eligibility age of Medicare. Such a deal, Daley stressed, would boost “market psychology” and “increase profoundly business and consumer confidence” in the economy, as David Lane, his counselor, characterized his views in an interview with me. Others in the White House viewed a deal as a political risk for the president and possibly a policy mistake. But Obama ruled in Daley’s favor.

PHASE TWO OF DALEY’S White House tenure began on July 22, the day on which the grand bargain talks collapsed amid mutual recriminations. At first, Daley looked more indispensable than ever: With the U.S. government in danger of defaulting on its debts for the first time, Daley became the commander of a White House war room. Senior staff spent more time camped out in his quarters than in the Oval Office, according to a senior White House aide, until a band-aid deal finally got put together with Republicans on the Hill.

But Daley’s prestige had taken a hit. NPR, for example, commented that the deal lacked any increase in revenue and “looked nothing like the goal Daley described last week.” Meanwhile, D.C. powerbrokers no longer felt as compelled to pay him deference. The Chamber of Commerce ignored the line set by Daley on the debt ceiling debate, instead publicly backing Boehner’s position—a fact that the beleaguered chief of staff seemingly only discovered when he was confronted about it in an interview with NPR.

All of a sudden, “very easygoing” Bill—Axelrod’s characterization—became characterized in D.C. as soft Bill, the guy who brings a knife to a gun fight. As critics saw it, a too-trusting Daley had once again been outmaneuvered by the Republicans, just as he had been, by the Bush gang, during the battle over Florida in 2000. It was clear that Washington insiders smelled blood, and they didn’t hesitate to attack. Even his underlings began complaining to the press about a distant boss who kept his door closed and limited attendance at meetings. (This despite the fact that Daley, in keeping with the Obama style, had largely proved a genial colleague—going out of his way, for instance, to write an e-mail to an aide apologizing for brusque treatment in a meeting, according to a senior White House official.)

Meanwhile, Daley did not appear set to play a central role in the 2012 campaign. Instead of helping to hatch campaign strategy, Daley was mostly tasked, according to a senior Obama aide, with operating as a surrogate for the president at fundraising events held around the country (a role he is expected to continue from his new base in Chicago).

“I think coming in late [to the White House] and not being part of the original Dream Team is a hard nut to crack,” a Daley intimate recently told me, because “the folks who got the president elected” always have the inside track. And what’s “a little bit unusual” about the Obama White House in particular is some senior staffers “having individual lanes reporting to the president,” without having to go through the chief of staff.

On Capitol Hill, Harry Reid seemed to regard Daley as persona non grata (even though the two were neighbors at the Ritz-Carlton Residences in D.C.’s West End). Reid was reportedly incensed over an interview that Daley gave Politico’s Roger Simon in which Daley blamed Obama’s troubles as much on stubborn Democrats as on intransigent Republicans. Daley did have a point: Some elements of the Democratic Party had, in fact, mounted a rebellion against any entitlement cuts whatsoever. But to air such criticisms in the press was to veer way off message.

Heightened tensions between Hill Democrats and Daley were reportedly one of the reasons that Obama, in November, gave Pete Rouse an expanded portfolio of duties, including Hill outreach. Rouse, who served as interim chief of staff in the few months between the departure of Emanuel and the arrival of Daley, had 30 years of experience on Capitol Hill, including 19 as chief of staff for former Senate Majority Leader Tom Daschle. He was also yet another White House aide with more personal history with Obama than Daley: After Daschle’s failed reelection bid in 2004, Rouse had signed on as chief of staff for Obama, who was newly elected to the Senate.

Even with all of these cards stacked against him, Daley still had, conceivably, a role to play as a bridge to the Republicans. And he did, in fact, rack up a win for the White House with the passage by Congress in October of the long-delayed free trade pacts with South Korea, Colombia, and Panama—popular with Republicans if not the Democratic base. Daley made “the big strategic call” to link action on those three bills to an additional piece of legislation providing assistance to workers who lose their jobs due to foreign trade, according to Gene Sperling, director of the National Economic Council in the White House—and Republicans in the end accepted that deal.

But the trade bills were an exception. Once the grand bargain died, Obama decided to make a pivot away from centrism and toward more explicit populism in order to better rally the Democratic base in preparation for the 2012 election campaign.

The Occupy Wall Street movement, for which Obama has expressed sympathy, made Daley look like an ever odder man out. After all, he’s an unambiguous member of the 1 percent: His former employer, JP Morgan Chase, paid him a bonus in 2010 of $4.8 million, and, in New York City, the Occupy crowd marched on the home of his former boss at the bank, Jamie Dimon. Asked last October if he had a message for Obama about Daley, an activist at D.C.’s McPherson Square encampment replied (it now seems presciently): “Get rid of him.”

IF DALEY IS DISAPPOINTED at how things have turned out for him, he hasn’t shown it. Friends—who sound more protective of Daley than he does of himself—say they have heard him sound frustrated and tired about the difficulties of getting things done in Washington, but not down. “He’s fine,” said a friend who has talked to Daley since the announcement of his exit. As for what went wrong, the friend offered this perspective: “[David] Plouffe is in charge of politics and reports to the president, and Valerie [Jarrett] is in charge of all external stuff, and she reports to the president. Then what is your job?” Given this, “Bill decided that he didn’t want to stay around for another year,” the friend said.

The fact that Daley’s appointment did not work out shouldn’t, perhaps, come as a surprise. As a millionaire boardroom Democrat, he was out of step with an increasingly populist political climate. And as someone without much personal connection with Obama, his margin of error was likely slim from the very start. In the end, the most interesting question about Daley’s rise and fall probably pertains to President Obama’s management style—namely, why he decided to hire Daley into such a precarious position to begin with.

Paul Starobin is the author of After America: Narratives for the Next Global Age.